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Why should businesses use ERP accounting?
Richly detailed financial reports
There are some of the reasons it’s wise to use ERP accounting. First of all, most of these benefits relate to one core issue, which is integration. The accounting system requires data inputs from many different sources, including manufacturing management, logistics, billing, warehouse management, HR, etc. These multiple data sources are automatically integrated into ERP accounting.
Financial reports like income statements, balance sheets,… are offered through standalone accounting packages. While ERP offers a wider variety of reports, not just only financial reports. Examples include cash flow projections based on inventory management and order statuses and accounts receivable aging overlaid with the customer order pipeline. These reports give you more of a comprehensive perspective than just financial data. Therefore, you will be able to manage your business more effectively.
Automation promotes productivity. When ERP and accounting are linked together, there is no doubt that it will be easier to automate workflows that cross between the two systems. When you use ERP accounting, many accounting and financial tasks can be completely automated. For example, you can refine accounts receivable, manage payables, and manage cash. Automation also allows you to track financial transactions more quickly.
Freedom from duplicate data entry
Having separate systems often means having to re-enter data from one to the other manually. Integrating ERP and accounting eliminates this tedious manual data entry process. ERP also makes data entry quick and especially consistent.
Not so many errors
Manual data entry is predisposed to error. These errors might be incorrect client names or transposed digits and, etc. Once these errors cause calculation mistakes, it will take time to unwind. With an ERP accounting course, you can track down someone who made a mistake.
A higher degree of control
Using ERP accounting gives you more control over your business. You can see the bottom-line impact of events and decisions in real-time.
In terms of finance, finances are the lifeblood of your business. It will benefit your business having the ability to access real-time financial information to make the business-critical decisions that drive profits and growth. You can easily find accounting solutions meeting your basic financial needs; however, a growing business needs more than that.
You might have to track a lot of financial transactions and numbers across your organization, and not just in the accounting department. In addition to basic accounts receivable and payable, you need to have knowledge of inventory in the warehouse, product profit margins, project costs, employee expenses, etc. Complex general ledgers are an inevitable difficulty for basic accounting software. Tracking and analyzing every dollar incoming and outgoing, in a way that fits your unique structure, is essential to managing a lucrative business. That’s why the ERP accounting information system will do wonders for the accounting and financial activities of your business. Recently, researchers are focusing on developing ERP integrating courses in all areas of business discipline including accounting.
>>>> Read more: ERP Benefits: Advantages and disadvantages of an ERP system
ERP accounting entries
Firstly, it is essential for you to know what data is stored in an ERP accounting entry menu, and understand why it is the most important part of the accounting module. The Journal entries menu is a kind of general ledger of your business, it is a company’s set of numbered accounts for its accounting records. For your information, the general ledger is the master set of accounts that summarize all transactions occurring within a company.
Each financial transaction affects at least two general ledger accounts and each entry has a debit and a credit transaction. Double-entry transactions are posted in two columns, with debit postings on the left and credit entries on the right, and the total of all debit and credit entries must balance.
You can find a complete record of all financial transactions over the life of the company in this menu. It contains account information needed to prepare financial statements and includes accounts for assets, liabilities, owners’ equity, revenues, and expenses.
So, to summarize, the journal entries menu is the list of all accounting transactions that represent every action of your company, that has to be mentioned in the financial statements.
ERP accounting module
The ERP accounting module is designed to automate general accounting operations, providing flexibility and utility to both SMBs (small and medium businesses) and to large enterprises with more complex activities (with many branches and locations, dealing with various currencies).
Unification and automation are the main ideas behind the ERP concept. Undoubtedly, each one of the ERP accounting modules can function separately. However, the synergy of all the components is what makes the value of the whole system increase expeditiously.
For example, the ERP accounting module can be used by the financial department and covers most of the needs. But when properly connected to the purchasing module, the ERP accounting module can even become way more useful. The cost of purchases will automatically sync to accounting and this will save a lot of time, effort and there will no longer be human mistakes. As a result, the accounting will get a summary of purchasing costs in a structured and convenient form.
This simple example demonstrates that Enterprise Resource Planning software provides maximum effectiveness, only when all parts of it are properly interconnected through the workflows and the database.
Fortunately, products of this type are highly flexible and scalable because ERP can be tailored to the organization’s needs. You can adjust both the custom build system and the packaging software according to your business activities. Certainly, software products designed for a wide variety of audiences lose out to solutions that are built for specific companies or industries. However, even the available solutions include a choice of packages for different companies of different sizes and types.
It has been a long time ago since this approach was adopted and that was the time when ERPs were mainly installed on the user’s premises. The industry evolved ever since the SaaS era has come. Today, anyone can change the set of available ERP features and modules in a few clicks, without having to struggle with implementation. In large organizations, it can take months and dozens of people to implement such changes. The ERP accounting module process has proved to be effective.
The ERP system presented excellent functions to manage myriad business processes in only one system. This system provides companies all around the world with improved efficiency, collaboration, customization, and scalability. Defining the workflow of every component will also help you to make the right choice on the ERP modules needed for your business.